ASIA/EUROPE CONFERENCE SETS HIGHER 2003 RATE TARGETS

ASIA/EUROPE CONFERENCE SETS HIGHER 2003 RATE TARGETS    The Far Eastern Freight Conference of ocean carriers in the Asia/Europe trade has announced large rate increases and higher target rates for next year.
   While there have been some rate increases since the beginning of 2002, the overall rates have not recovered to their 2000 level, and are still 30-40 percent “below acceptable levels,” according to the conference.
   “We see the market getting firmer,” said Rod Riseborough, spokesman for the FEFC.
   In the westbound trade from Asia (outside Japan) to North Europe and the Mediterranean, the FEFC announced a rate rise of $250 per TEU, effective Jan. 1, followed by further increases of $150 per TEU, effective April 1, and $250 per TEU, effective July 1.
   The three rate increases for next year, if fully implemented, would add $600 per TEU to current westbound freight rates of approximately $1,100 per TEU from Asia to Europe.
   For conference contracts, the FEFC set a rate to North European ports of $1,200 per TEU for six-month contracts, and $1,350 for contracts with a 12-month duration.
   For eastbound shipments, the FEFC announced a rate increase of $250 per container (regardless of size) from North Europe to the Far East, effective March 1. From Mediterranean ports to the Far East, it has set two increases: $200 per container, effective March 1, and $200 per 20-foot container or $250 per 40-footer, effective June 1.
   Riseborough said the rates announced for 2003 are target rates, because the conference itself cannot enforce agreed rates, and carriers retain their right of independent action.
   The conference carriers believe they have made necessary seasonal adjustments to bring their capacity and market volumes closer together.
   “It would appear that with the current growth of about 4 percent westbound, and 3 percent eastbound, the trade is well covered by the capacity that is available at the present time,” the FEFC said in a statement.
   In addition to the capacity adjustments, FEFC carriers said they have continued to cut their costs in an attempt to ensure that they are operating as economically as possible.
   The FEFC lines expect the Asia/Europe container trade will continue to grow, and the market “will remain strong.”
   “While the member lines appreciate that we all face difficult conditions in our respective businesses, they nevertheless hope that shippers will understand the fact that the current low rates are not sustainable in the long term,” the FEFC conference noted.